Giuliani Cuts Cash Awards To Landlords for Homeless

By SHAWN G. KENNEDY

Published: March 16, 1994

The Giuliani administration has ordered drastic cuts in a program that has awarded landlords thousands of dollars in incentives for providing apartments to homeless families living in shelters.

Administration officials said the bonus program paid some landlords too much money. They said the reduction would not hurt the program in part because of recent increases in Federal rent subsidies.

The reduced payments, which the administration expects will save $18 million in state and city money, come on the heels of proposed budget cuts that would eliminate city financing for a program that creates housing for single homeless men and women. Housing advocates describe these programs as a central element of a successful effort that has movedthousands of homeless people from shelters to private housing.

Administration officials say neither cutback will affect the availability of permanent housing for the homeless, and they say that both will help the city economize as it is faces a budget gap of more than $2.3 billion.

But advocates for the homeless said they feared that the combined cuts could decimate more than 10 years of efforts to move the homeless from shelters to permanent housing. In the last decade, the two programs have produced more than 10,000 permanent apartments for the homeless.

The latest cut, which took effect Monday, reduces the bonuses that landlords receive for making their apartments available to shelter residents through the Emergency Assistance Rehousing Program, or E.A.R.P. Until Monday landlords had received a flat grant of $2,300 for every family member placed in new apartments. The new rate is a sliding scale, with a minimum of $1,000 per two-person family to a maximum bonus of $5,000 for families of eight or more.

Landlords who have apartments in the pipeline as of last Friday, and who have contracts with the New York City Housing Authority and tenant leases signed by June 30, will receive bonuses based on the higher schedule.

Joan Malin, the Commissioner of the city's Department of Homeless Services, said she felt that the new schedule of incentives would remove what she characterized as generous payments to landlords who place big families. "With the old schedule," Ms. Malin said, "there was no cap on the size of the bonus landlords could get. So a landlord could get $20,000 or more for each family accepted."

"There is no doubt that there is little housing available for large families," Ms. Malin said. "But there was a concern that for the top levels on the schedule, the payments were out of whack with the market."

She added that the administration does not believe the cuts in the cash bonuses will hurt the program, in part because recent increases in Federal rent subsidies will shift the incentive from the one-time bonus to the higher rents.

She said by raising the fair market rent levels, participating landlords would get higher rents and more landlords would qualify for the program. "It opens another band of the market to us," she said.

But several landlords said yesterday that they would probably stop participating because of the cuts in the bonuses.

"They have just destroyed the program," said Ira Kellman, a landlord who had not heard about the bonus cuts.

Mr. Kellman, who rents to about 30 E.A.R.P. tenants in Harlem, said the change in policy was a further disincentive for participation. 'It's Not Worthwhile'

"After a point," Mr. Kellman said, who like other landlords complained about burdens of dealing with three agencies and the risk of seeing apartments stand empty while tenants were placed, "it's not worthwhile."

Mr. Kellman said that just this week he was considering offering 5 or 10 units that had recently become available in his complex to the city for tenants from the program. But he said he would need more information before making a decision.

In addition to the cuts in the bonus program, a provision in Mayor Rudolph W. Giuliani's proposed capital budget for the next three years would eliminate $89 million in city spending for the S.R.O. Loan Program, which helps nonprofit groups that develop single-room housing with support services for single homeless people. The Department of Housing Preservation and Development, which administers the program, hopes to make up the cut with Federal money. Cuts Found Troubling

Gretchen Buchenholtz, executive director of Association to Benefit Children, which operates Rosie and Harry's Place, a shelter in East Harlem, said she found the cuts in the bonus program "troubling and potentially short-sighted."

"If this move is going to reduce the number of apartments available to shelter residents," she said, "then more families will be stuck in shelters for a longer period of time, resulting in the long run a greater financial cost to the city and a greater human cost to the families."

The program was established in 1982 to help find private alternative housing for the homeless. But owners did not embrace it until 1986, when the State Legislature approved a bonus of $2,300 to landlords for each person in the household the first time a unit's lease was signed.

When the real-estate market was booming and few apartments were available, the payments encouraged landlords to renovate their properties to lease them to the homeless. To participate, landlords must sign 32-month leases and are paid fair-market rent through a combination of Federal rent subsidies and the tenant's public assistance income. 2 Programs Stepped Up

After struggling through most of the 1980's with various ways to meet the needs of a growing population of homeless, the city stepped up both the bonus program and the S.R.O. Loan Program and saw them as an increasingly important component in its commitment to reduce the use of welfare hotels. Last year 2,300 shelter families found permanent homes as a result of the incentive program, and Ms. Malin said the agency's goal is to use it to find permanent homes for 2,700 families.

Since 1988 the S.R.O. program has developed 3,800 single-room apartments for homeless people.

Ms. Buchenholtz said she is most concerned about where the homeless families will go if the landlords abandon the program.

Correction: March 17, 1994, Thursday Because of an editing error, an article yesterday about a New York City program that awards cash incentives to landlords who provide apartments for homeless families misstated the minimum payment in some editions. It is $1,000 for housing a two-member family, not $1,000 per person.